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Why do car deals sometimes fall through?

It’s often an issue of failing to play by the rules.

Imagine that you buy a car you’re absolutely in love with. You show your family and friends. You take a selfie in front of it and post it on Instagram. You vow to wash it every week and keep it maintained on a rigid schedule. And then someone from the dealership calls a few days later to say, “Sorry. You have to bring it back.”

This happens sometimes. It’s so disappointing, for the customer and the dealer alike. New car purchases are rarely anything but mutually beneficial. Neither party wants the deal to fall through. The dealer loses a sale, and the customer loses an impressive piece of driveway candy. So why does it happen?

The dealer loses a sale, and the customer loses an impressive piece of driveway candy.

It happens for various reasons, but normally it’s centered around communication problems and a failure to follow rules. Let me explain with an example.

Recently, we had to call a customer with this sad news. She was upset, and we understand why. She had verbally shared her income with us, and everything pointed to a loan approval. As it turns out, there was a misunderstanding about her income, and the bank ultimately said no deal. But here’s where things went from bad to worse: The customer didn’t provide proof of income until she’d been driving and loving that car for 11 days. With that kind of lag in information sharing from someone whose credit labels them an at-risk borrower, banks are skeptical of the validity of the documents. Each passing day makes it more difficult to secure a loan from any lender.

This brings me to the “Conditional Delivery Agreement.” This customer signed one, and it’s very common among all car dealers. It’s a legal document that says, in part, that the customer agrees to supply information required by the bank. Explicitly, the agreement states: “I further agree that if a lender requires additional information from me to verify my creditworthiness, I will immediately comply with such request(s).” The bank required it, and we requested it on three separate dates following her attempt to buy, but she sent it 11 days later.

Immediately means way sooner than 11 days, and for good reason. After 11 days, other problems can mount. In this case, a consequence of the delay caused her to be charged a payment for a car she didn’t own. After opting to pay every two weeks to save on interest (smart move, by the way), a third party service attempted to transfer money from her account to the bank. If she had supplied her income proof “immediately,” we could have canceled the payment management service well before this happened. Thankfully, we were able to help stop the payment, or else it would have been 10-15 business days for a refund.

No car deal should take this long. It’s rare that this happens at Legacy. We should’ve either retrieved the vehicle or nagged about securing income proof a few more times and a little bit louder. But our manager erred on the side of patience because he’s a nice guy—plus, he really wanted to sell the car. That’s what we’re in business to do, after all. He couldn’t predict these unintended consequences associated with the delayed information.

So what was the result of these good intentions coupled with contract noncompliance? We’ve been accused of implementing fraudulent practices in a version of the story on Facebook that’s grossly distorted and includes selective details. Plus, the customer no longer has a new car that she loved—a car that she actually spent money on by having the windows tinted without officially owning it. (We reimbursed her for this, incidentally, but it doesn’t always work out so well for a customer who jumps the gun). And it all could have been avoided if the word “immediately” had been taken seriously.

…the unintended consequences could get ugly.

Rest assured, we’ve learned a lesson. Our policy has changed to forbid such delays without action. Like I said, it’s rare this happens anyway, but when it does, we’ll refuse leniency from now on. That way, we can implement our normal escalation process for getting people approved with timely information and timely results. And best of all, we’ll avoid the problems outlined here that resulted in a huge lose-lose for all parties concerned.

We hope you’ll accept these words as intended—a teachable moment, or even a public service announcement. We urge you to always understand and comply with contractual obligations. As outlined here, the unintended consequences of not playing by the rules could get ugly.

Leave a comment if you have questions or concerns about this, or if you want to add to the conversation. I don’t always have the answers, but I know people who do. And I’m just wild about digging up info for people.

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